Letter from the CEO Greetings Momentum Subscribers,
Greetings from Chicago.
It's been brought home over the last few weeks of chaos in our world economy (has it only been weeks?) that short-term thinking is damaging to the health of our corporations.
If we're ready to learn from our mistakes, we need to start looking at the long-term rather than quick gains and short sells. In this issue of Momentum, we celebrate those people who are excited to look to the long-term, and think about how our corporations can be viable over time.
Karlin Sloan
CEO
Karlin Sloan & Company
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Long-Term Thinking: Strategies that Focus on the Customer
by Karlin Sloan
In a recent interview with Jeff Bezos in Business Week, the focus was on innovation. I loved what he had to say.
Q: Every company claims to be customer-focused. Why do you think so few are able to pull it off?
A: Companies get skills-focused, instead of customer-needs focused.
When [companies] think about extending their business into some new
area, the first question is "why should we do that-we don't have any
skills in that area." That approach puts a finite lifetime on a
company, because the world changes, and what used to be cutting-edge
skills have turned into something your customers may not need anymore.
A much more stable strategy is to start with "what do my customers
need?" Then do an inventory of the gaps in your skills. Kindle is a
great example. If we set our strategy by what our skills happen to be
rather than by what our customers need, we never would have done it. We
had to go out and hire people who know how to build hardware devices
and create a whole new competency for the company.
One of the great mistakes companies make is to keep doing what they're good at, rather than adapting to shifts in the marketplace, and developing new skills and attributes.
In their business classic "Built to Last" Collins and Porras demonstrate that it's the companies that stick to their core values and innovate based on market changes that are sustainable over multiple generations.
The worlds oldest corporation, Stora Kopparberg currently headquartered in Helsinki, was arguably started in 1288, and is STILL GOING. They have gone from mining for copper in the 1300s at the end of the dark ages, and have expanded and shifted based on market needs ever since.
Stora is currently Sweden's largest supplier of electricity, a manufacturer of newsprint paper and pulpwood supplying 40 nations, is Sweden's largest steel manufacturer and largest supplier of dairy and agricultural produce. Now that's a long-term success story!
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Strategizing in Periods of Uncertainty
by Dorie Ellzey Blesoff
To quote Yogi Berra, "The future ain't what it used to be." Today, leaders confront uncertainty in almost every aspect of their organization's external environment. With the rapidity of major shifts in the economic and political landscape, it is difficult to keep one's assumptions up-to-date, and we know that strategic planning based on outdated assumptions is not effective. Scenario planning can help.
"Scenario planning is a discipline for rediscovering the original entrepreneurial power of creative foresight in contexts of accelerated change, great complexity, and genuine uncertainty." --Pierre Wack, Royal Dutch/Shell, 1984
Based in learning organization techniques of questioning assumptions and reperceiving current reality, Scenario Planning provides a structure for a leadership or system-wide team to frame a focal issue, and systematically explore relevant factors in order to devise responses to several plausible futures. While the result of this method does not guarantee an unquestionable forecast of future events, it does create a well-crafted basis for making decisions and taking actions.
After defining the focus, participants engage in collective inquiry of key factors in the internal micro-environment and external macro trends in STEEP (social, technological, economic, environmental, and political spheres). After ranking the critical uncertainties, the team imagines several scenarios, in the form of stories that describe how a plausible future may look, sound, seem, to those who will be living it. Thinking ahead about the imagined scenarios, the team begins to identify early indicators for each scenario, as well as actions to take currently that will make sense no matter which scenario, or combination of scenarios, begins to unfold.
Scenario Planning worked well for a distribution center leader whose team needed to develop a disaster plan, not knowing whether or not a new sorting system would be installed within the year. The team developed scenarios to cover having, and not having, a new system, and took steps to map out back-up schemas and educate team leaders about all contingency plans.
Leadership teams that know to pay attention to trends in the external environment can regularly incorporate a S-T-E-E-P analysis into their meetings. Changes that have significance can be anticipated, or recognized sooner, so that plans can be adjusted accordingly.
A valuable by-product of this method is that the leadership or system-wide team that participates begins to share more knowledge, and wisdom, from comparing points of view and functionally-specific expertise. Also, by focusing on the external environment and collaboratively ranking key drivers of change, even a team that has acted divisively in the past begins to unite based on a common understanding of serious challenges to the organization.
At a time when "agility" is being recognized as the key ingredient for success, it is helpful to learn more about methods of strategic planning that encourage organizational agility. Scenario Planning offers a systematic way to plan imaginatively, and to take action while remaining agile and responsive to cues from the external environment.
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Quotations
""The roads we take are more important than the goals we announce. Decisions determine destiny. " - Frederick Speakman
"Western capitalism is fighting a form of business cancer. And the most virulent form of it is short-termism." - Charles H. Green
""The obsession with short-term performance does not create value for shareholders and in many cases destroys value."" - Dean Krehmeyer
"Life is the sum of all your choices." - Albert Camus
"To get anywhere, or even to live a long time, a man has to guess, and
guess right, over and over again, without enough data for a logical
answer. "
- Robert Heinlein
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Smarter, Faster, Better
Reading Groups
As more organizations begin to focus on long-term thinking, they realize their executives and managers need to focus on becoming Smarter, Faster, and Better in this Age of Interdependence.
To get the most out of this book for your organization, we invite you to recruit a reading group with your colleagues or team.
Use this as part of your organization's leadership development initiatives, or to test the interest in one. Or, use it to create new relationships and expand your network.
Reading and then talking with colleagues about what you are reading and how to apply what you are learning in your own work and life can be a powerful way to learn, to get support and get to know others on a deeper level.
In support of setting up your own readers group we've provided guidelines for setting up your group. To request that our guidelines be emailed to you for free, please email us at getinfo@karlinsloan.com.
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RE:INVENTION
A New Way of Dealing with Outplacement
In order to address our client's needs, we at KS&C have created a new outplacement program that looks at the whole person and focuses on empowerment. Unlike traditional outplacement which is focused on the tactical world of resume writing and interview skills, our program is focused on personal vision, values, support systems, and commitments for the future. It is a process of transition and transformation that builds loyalty to the organization even after a layoff.
This ten-session coaching program titled Re:Invention, is available now. To find out more, please contact us at clientrelations@karlinsloan.com.
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